Stamp duty holiday: Why I’d buy FTSE housebuilders, real estate agents, and REITs
The Motley Fool
Published Jul 12, 2020 09:43
Updated Jul 12, 2020 10:10
Stamp duty holiday: Why I’d buy FTSE housebuilders, real estate agents, and REITs
The chancellor recently introduced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland. The changes will be in effect until 31 March 2021. According to Zoopla Property Group, “nearly nine out of 10 transactions will no longer be subject to stamp duty. And in London and the South East, home to more expensive properties, buyers could save up to £14,999 overnight.”
Until the announcement, there was no stamp duty on transactions below £125,000. Housebuilders, estate agents, and those looking to buy a property, including buy-to-let investors, have cheered the substantial stamp-duty change. As the Covid-19 lockdown ends, there are early signs that the housing market is likely to gain from increased activity that may follow in the summer. Let’s now take a closer look at how share investors can benefit.
Which housebuilders to consider Over the years, real estate has continually proven to be a solid investment. According to the most recent figures from the Office for National Statistics, “UK average house prices increased by 2.1% over the year to March 2020… London’s average house prices increased by 4.7% over the year to March 2020; this is the largest 12-month growth London has seen since December 2016″.
Although we do not yet know the full impact of the coronavirus-related developments on house prices since March, the sector is hopeful that prices will hold up well in the rest of the year.
Both the FTSE 100 and the FTSE 250 indexes offer plenty of choices when it comes to property investing. Which property companies am I watching right now? If you’re interested in researching housebuilders, then Barratt Developments (LON:BDEV), Bellway (LON:BWY), Berkeley Group, Countryside Properties, Crest Nicholson (LON:CRST), Persimmon (LON:PSN), Redrow (LON:RDW), Taylor Wimpey (LON:TW), and Vistry Group deserve to be on your radar.
You may also want to do due diligence on real estate agents such as Foxtons (LON:FOXT), Rightmove, and Savills (LON:SVS). Year-to-date, their share prices are down 57%, 13%, and 29% respectively.
Get The App
How about REITs? The UK property market is one of the most significant sectors of our economy. Property is a tangible asset that many people are familiar with. But that doesn’t necessarily make it a better investment than buying into FTSE shares of companies within the industry.
Investors may also want to consider publicly traded real estate investment trusts (REITs) for a long-term retirement portfolio.
The REIT regime was introduced in the UK in 2007. These real estate investment trusts own and manage property on behalf of shareholders. They can own residential property and/or a portfolio of commercial real estate such as retail outlets, office buildings, hotels, or warehouses. I regard a REIT as a tool that enables me to own a wide range of property assets without buying property myself.
There are strict regulations governing publicly listed REITs in the UK. According to the website of the London Stock Exchange, “there are over 50 REITs with a market capitalisation of over $70bn listed” on the exchange. Several of these investments trusts that have proved popular with investors include British Land, Derwent London, Hammerson, Landsec, Segro, Tritax Big Box, and Urban Logistics.
2020 has witnessed a downturn in broader equity markets. Yet investor confidence is beginning to return both to the housing market and FTSE stocks. Market participants now have the opportunity to pick up some quality stocks and REITs that operate in the housing industry relatively cheaply.
The post Stamp duty holiday: Why I’d buy FTSE housebuilders, real estate agents, and REITs appeared first on The Motley Fool UK.
us better investors.
Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.